ICHRA Information for New York
How does ICHRA offer employees their choice in benefits AND save them money at the same time?
To sum it up, ICHRA allows both large and small businesses in the freedom to offer its employees a specific amount of tax-free money to be used towards the purchase of individual medical insurance. Along with the option to buy individual health coverage, employees may also be given the option to use that money towards out of pocket expenses. ICHRA provides freedom of choice for employees, controls cost for all parties and directly addresses ACA compliance for Applicable Large Employers.
Companies often use HRAs to reimburse their employees’ healthcare expenses associated with group insurance. This strategy is most often used to ward off increasing premium costs but with most employers seeing tremendous increases in premium a new tactic is needed.
The Affordable Care Act (ACA) limited an employer’s ability to offer a contribution towards their employee’s individual health insurance premium. The qualified small employer HRA (QSEHRA) did help to fix some of the regulations imposed by the ACA, but there were still challenges for employees seeking relief from their expensive one-size-fits-all group health plan.
Then in 2017, the agencies (Departments of Treasury, Labor and Health and Human Services) began a mission to expand business’ use of HRAs for individual insurance. After almost 2 years of planning new rules were released establishing ICHRA as a viable option for large and small employers beginning January 1, 2020.
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Is ICHRA compliant for large employers and what is the benefit for small employers in New York?
If you’re an employer you can offer an ICHRA, period. Companies ranging from just a handful of employees to larger employers with thousands of workers can benefit from an ICHRA. ICHRA eliminates the burden of traditional group insurance plans and offers a wide variety of benefits to both employers AND employees. It provides flexibility in costs and allows for different levels of contribution based on employee classes.
Implementing an ICHRA is simple and its design allows employees to choose the insurance that fits their specific needs, and ICHRA Administration is a breeze with Flyte’s innovative system.
Employers decide on what to contribute per employee class and their employees choose a plan that fits their needs. After the employee submits proof of their expenses, and within the allotted allowance amount, the company reimburses the employee as per the plan’s design.
Every employee within that determined class of employees is eligible provided that they are covered under an individual policy. Is ICHRA a good option for your business, click the Get ICHRA button at the top of your screen for information on how to get started today.
The process for implementing ICHRA benefits is simple, and its design allows employees to choose the plan and benefits that best meet their unique needs. From an administration perspective, ICHRA’s method is straight-forward. An employer decides what allowance each employee class will receive. Then, employees make their health care purchases, including insurance, and submit proof of their expenses. Within the allotted allowance amount, the company reimburses them for those expenses. It’s that easy!
Who’s eligible? As long as an employee has coverage under an individual health insurance policy, and the employer chooses to include their employee class in the ICHRA, they’re eligible.
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Who benefits from an ICHRA?
Throughout New York, ICHRA provides an advantage over group health insurance, like we’ve never seen before. Employers decide the cost and employees choose what’s right for them.
FLEXIBLE
ICHRA provides the flexibility employers have sought after for decades. Employers choose a contribution that meets the company’s goals without any caps or minimums. They choose which employees to offer ICHRA by selecting one or more of the designated classes. Employees shop all available individual policies available in their area and enroll in a plan specific to their needs and budget.
EMPLOYEE ATTRACTION
Today’s employers are competing for talented employees to fill a variety of jobs. Employers who offer benefits are considered first by prospective employees. Simply providing benefits can be an expensive, but to offer a plan that meets everyone’s needs is even more expensive. Not with ICHRA! ICHRA allows an employer to provide freedom of choice to each eligible employee without spending thousands (or more) per month per employee. Each employee is unique, wouldn’t you like to offer a benefit that is too.
COST MANAGEMENT
Finally! Employers are in the driver’s seat when it comes to how much benefits will cost for the company. ICHRA allows employers to control the costs of the benefits down to the penny. In an environment where annual increases are the norm, ICHRA puts today’s employer in a position to spend as much or as little as they choose. That’s right, ICHRA protects your business and your employees.
COMPLIANCE
Everything you’ve learned about ICHRA applies to large and small employers, but for Applicable Large Employers (Click HERE if you are not sure if that applies to you, or call us and we’ll help) ICHRA can meet all of the Employer Mandate requirements imposed by the Affordable Care Act. Provided some basic affordability requirements are met, simply offering an ICHRA meets the full scope of the mandate. Yes, you read that correctly. By simply offering an Affordable ICHRA, regardless if anyone enrolls in it, you have satisfied the requirements of the ACA. We’re here to help! Contact us today to learn how ACA Compliance can be more affordable than you ever thought possible.
TAX SAVINGS
ICHRA comes with a variety of benefits, the best being that all money that comes through is 100% tax free. All amounts contributed by employers are exempt from wages and are tax deductible, and any additional amount contributed by employees can be done on a pretax basis thus reducing everyone’s overall tax liability. Bottom line, if an employer offers this option the entire individual policy can be paid tax free. We have made this process very simple and hassle free for employers of all size. Contact us today for more information on how easy this can be.
ADMINISTRATION
Managing benefits can be difficult and often takes a team of people. Many businesses see this work as a significant burden on their company, and an expensive one. An ICHRA can be set up and administered internally by the business or it can be managed by an administrator, like Flyte HCM. We’ve made ICHRA very simple and will gladly show you how it’s done. That said, if you want to remove the stress of record keeping, managing transactions, and overseeing compliance, then hiring an administrator may be a great fit. We are and affordable and friendly option for employers in any state and of any size. We can support all of your ICHRA and ACA Compliance needs.
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Is ICHRA complicated?
SIMPLE AND EFFICIENT
Our ICHRA platform is a simple four-step process:
- We work together to design a plan that fits your needs including: defining reimbursement limits, setting eligibility requirements and planning enrollment.
- Each eligible employee shops for and purchases an individual plan specific to their unique personal and family needs.
- Claims are submitted by employees for reimbursement.
- Each individual is reimbursed for their approved claim.
ICHRA EMPLOYEE CLASSES
Employers have the freedom to define reimbursement amounts and rules for different groups of employees. These groups are referred to as “classes” and class options are as follows:
- Full-time and part-time employee status
- Salaried or non-salaried workers
- Seasonal or temporary staff
- Geographic rating areas
- Coverage waiting periods
The use of classes within the ICHRA system provides an amazing level of flexibility to employers and businesses as they are creating an offering that works for everyone. See our post on Employee Classes. https://ichra.com/ichra-and-employee-classes/
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Flexibility built in for your business
and your staff.
ANNUAL AND MID-YEAR ENROLLMENT
To be eligible for an ICHRA plan in New York, all employees must have coverage through an individual health insurance plan. Plan options include: ON or OFF exchange coverage, Medicare Parts A and B, or Medicare Part C. There is a short enrollment window that opens and closes each year. This time period is called Open Enrollment. During this time anyone is eligible to enroll in an individual policy of their choosing. Outside that window, specific life events can trigger a mid-year enrollment window called a Special Enrollment Period – things such as getting married, having a baby, and moving are common events that trigger a Special Enrollment Period. A new event that triggers a Special Enrollment Period is eligibility in an ICHRA plan. So, employees currently enrolled in your ICHRA can change their plan at the end of the year during Open Enrollment, or for an employee coming on mid-year, once they are eligible to enroll in your ICHRA they are also eligible to enroll in an individual policy.
One item to note is that employers offering an ICHRA will need to offer employees the chance to “opt-out” of the ICHRA plan. This allows them to claim their tax credits through an exchange instead of receiving the employer contribution.
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Is ICHRA insurance?
The quick answer is, no. ICHRA is not insurance. By offering a ICHRA, an employer is simply making a promise to pay their employees a specific amount of money in the form of a reimbursement towards the cost of the employees individual health insurance.
ICHRA is considered an alternative to Group Insurance, but an ICHRA is not an insurance policy.
Employees are encouraged to work with a licensed agent in their state to shop for and purchase an individual insurance policy that is specific to their needs. Employees can choose from a variety of options like premium, deductible, coinsurance vs HSA, and much more. Their coverage will finally be tailored to their needs.
FREQUENTLY ASKED QUESTIONS REGARDING ICHRA IN New York
Flyte HCM’s ICHRA Administration is a product designed to deliver on the federal ruling, ICHRA. ICHRA stands for Individual Coverage Health Reimbursement Arrangement and is a set of rules allowing businesses of all sizes to contribute to the cost of individual policies owned by your employees.
For years, HRAs had been a popular solution for businesses who wanted to reimburse their employees’ healthcare expenses. The Affordable Care Act (ACA) changed that, significantly limiting a business’s ability to offer HRAs for individual policies.
In 2017, an Executive Order was issued directing the Departments of Treasury, Health and Human Services, and Labor to expand business’s use of HRAs once again. In June of 2019, new rules were released, establishing ICHRA as an option for 2020.
- Employers contribute money towards their employee’s individual medical insurance tax-free.
- Employees coverage is specific to their needs.
- Overall benefits costs are in the control of the company.
- Simple and cost-effective administration.
- ICHRA Administration is a great way to attract and retain valuable employee relationships.
- Employers choose a plan design that meets their business needs.
- Employees choose individual insurance based on their needs.
- Employees submit their expenses for reimbursement as per the ICHRA Plan design.
- Employee receives reimbursement directly into the bank account of their choice.
Yes! ICHRA Administration is compliant with all existing and applicable laws. Flyte HCM has left no stone unturned when it comes to compliance and ease of administration.
No. As part of the ICHRA ruling, employers implementing ICHRA Administration cannot take part in or influence which health insurance their employees purchase.
It’s simple. ICHRA Administration puts cost control back in the employer’s hands and puts the choice of health coverage in the employee’s.
We’re excited to connect with you.
Please contact us to learn more.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement and is a ruling brought down by the Departments of Treasury, Health and Human Services and Labor which allows for and provides guidance to employers wishing to reimburse money toward Individual Health Insurance premiums as well as specific Excepted Benefits. See our blog post for more information.
All companies regardless of size can offer an ICHRA. Large employer or small, there are benefits to offering this great Plan option. Every benefits offering has its considerations with regard to compliance, so please read the rest of our great content for further clarification and if you have any questions, please reach out to us by clicking, Contact Us.
Employers have a great deal of flexibility in what their money can be used for, and the dollar limits. For example, an employer can offer money toward individual premiums, specific out of pocket expenses, or both. There are compliance considerations to each so please visit our Blog page for details regarding compliance and plan design considerations.
An ICHRA is considered an ERISA Plan so there are specific areas of compliance that need to be addressed for this great option to be complaint. A few of these considerations are as follow:
- Plan documentation is required which includes a Master Plan Document, SBC and Summary Plan Description.
- Timely and specific communication with your employees is necessary.
- An ICHRA is subject to all ERISA non-discrimination requirements.
Please visit our Blog page for more information. Please contact us with any questions you may have.
A few additional considerations are as follows:
- You may offer different amounts of money to different classes of employees, but those amounts cannot vary past a certain amount and the classes available are outlined in the ICHRA ruling.
- You can offer money to an employee for medical expenses only, but those expenses must be in conjunction with a medical plan.
- An employer may allow the employees portion of their individual premium be deducted from wages on a pretax basis.
Employees who are within an eligible class may participate in the premium reimbursement provided that have enrolled in an individual or family policy. Employees who are eligible for an excepted benefit HRA may be reimbursed medical expenses incurred in conjunction with their health insurance, whether it’s individual coverage or not.
No, the ICHRA ruling does not outline a minimum number of enrolled members in order to be compliant.
No, the ICHRA ruling does not stipulate a maximum or minimum amount required in order to be compliant. See our Blog page for more information with regard to any Plan design considerations.
Yes you can! In fact, offering an ICHRA means you have made an offer of Minimum Essential Coverage. In certain circumstances, offering an ICHRA with specific contribution level would even mean that you made an offer of Minimum Value. See our Blog page for more information with regard to ICHRA’s impact on employers with more than 50 employees.
The short answer, it very well could. This is an exciting possibility for Large Employers struggling to offer the ACA equivalent of a Group Health Insurance Plan. Offering the ICHRA alone constitutes an offer of Minimum Essential Coverage, but in order to make it Affordable, an employer must consider a variety of factors. See our Blog page for more information with regard to making ICHRA affordable.
The ICHRA ruling provides guidance that employers can offer varying contribution amounts provided the amounts are divided by approved classes of employee. The approved classes are as follows:
- Full-Time Employees
- Part-Time Employees
- Seasonal Employees
- Employees covered by a collective bargaining agreement
- Employees who have not satisfied a waiting period for coverage
- Non-Resident aliens with no US-based income
- Employees whose primary site of employment is in the same rating area
- Salaried Employees
- Non-Salaried Employees
- Temporary Employees of a staffing firm
- A combination of two or more of the approved classes
No, your employee may still enroll through an exchange. However, if they are enrolled through an exchange they will not be eligible for an Advanced Premium Tax Credit(APTC). If they are enrolled in an ICHRA as well as receiving an APTC, the APTC discount will be clawed back from them on their next tax return. See our Blog page for more information with regard to ICHRA’s impact on Advanced Premium Tax Credits.
No, the ICHRA ruling provided guidance that being eligible for this Plan established a Special Enrollment Period thus allowing your new employee to enroll mid-year. See our Blog page for more information with regard to ICHRA’s impact on mid-year enrollments.
